Easy to see why some landlords are selling up

As property prices rise, many landlords are taking the opportunity to sell up. This is particularly the case for accidental landlords, many of whom wish to be free of all of the red tape, regulations and taxes following an investment property.

This is putting even further supply pressure on the rental sector as the property is likely to be bought by an owner occupier.

It’s hard to blame some landlords for selling up when you look at the numbers.

Take a typical €200000 property renting for the average €800 PCM in Cork County.

The following are typical deductions a landlord would have on a rental property.

Allowing for the average 1 month vacancy period between lettings, the total rental income is €8800 pa.

Property tax 315

Prtb charge 90

Letting fees incl Vat 600

Property insurance 400

Grass cutting and hedges 500

Repairs, appliances and renewals 750.

Total costs approx €2650

Surplus of expenses over income €6150. Assume a basic tax rate and USC of approx €1650 leaving an after tax figure of €4500.

This is before any mortgage payments the landlord may have.

To sum up – approx 25% of the landlords rental income is paid over to the government and 25% to cover costs associated with the letting.

The landlord is left with roughly 50% of the gross rental income before they pay any mortgage or dilapidation’s.

Landlords have for years been asking the government for rental income to be taken out of their USC calculation. This has been ignored.

How do the policy makers then deal with the inevitable rental price rises due to lack of available property – they introduce rent pressure zones and further red tape thus making a case for even more landlords to sell up and leave this sector.

Stop – give landlords more incentives to hold on to their investment properties. Take rental income out of the USC calculation especially for landlords making a loss after mortgage repayment.